Multiple Choice
The full-disclosure principle requires that financial statements report which of the following?
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1. Introduction to Accounting
The Financial Statements
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Which of the following best describes the primary role of auditors in financial reporting?
A
To ensure the company maximizes its profits.
B
To provide an independent opinion on whether the financial statements are presented fairly in accordance with applicable accounting standards.
C
To prepare the financial statements for the company.
D
To manage the company's internal accounting records.
Verified step by step guidance1
Understand the role of auditors in financial reporting: Auditors are independent professionals who assess the accuracy and fairness of a company's financial statements.
Recognize that auditors do not prepare financial statements or manage internal accounting records. These tasks are typically performed by the company's management and accounting team.
Note that auditors do not focus on ensuring the company maximizes its profits. Their role is not related to profit maximization but to providing assurance on financial reporting.
Learn that the primary role of auditors is to provide an independent opinion on whether the financial statements are presented fairly and comply with applicable accounting standards, such as GAAP or IFRS.
Conclude that the correct answer is: 'To provide an independent opinion on whether the financial statements are presented fairly in accordance with applicable accounting standards.'
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